Power3 Medical Products - Frequently Asked Questions

What does Power3 Medical do?
The Company conducts research and discovery programs and diagnostic development activities designed to provide our customers, patients and physicians alike, with the ability to be better prepared to address a devastating disease life cycle. We will enable clinicians to diagnose earlier, provide therapy earlier and monitor the disease earlier with greater accuracy. By achieving this, patients and their families can be treated for, cope with, and recover from the effects of the disease they possess.

What is the goal of the Company?
Power3 Medical is committed to bringing the medical community and ultimately the public, breakthrough diagnostics and therapies aimed at improving healthcare, survival and quality of life (QOL) for patients and families. Ultimately these breakthrough discoveries will encapsulate early detection, differential stratification, monitoring of therapy and of disease itself.

Why the focus on discovery and diagnostic development?
Our emphasis as a pioneering biotechnology discovery and development company has enabled us to leverage our proprietary clinical proteomic processes to begin the development of tools for diagnosis, prognosis, early detection and drug therapies to address the needs in several types of cancers, metabolic syndrome, cardiovascular, and neurodegenerative and neuromuscular diseases such as ALS (Lou Gehrig's Disease).

What is proteomics and why are proteins and biomarkers important?
Proteomics is the study and analysis of proteins, the fundamental building blocks of the human body. By studying these proteins, scientists can understand more fully the functioning of a healthy body and identify the proteins associated with specific diseases.

Proteins are not only the building blocks for life; in them, evidence can be found for serious diseases such as cancer, Alzheimer's, or AIDS. The latter can occur if proteins are falsely structured, unnaturally accumulate, or do not exist.

For on-target treatment with new medicines we need to know and compare the exact structure of the diseased-related proteins and the healthy-related proteins. Only if we can specify the precise differences between diseased-related and the healthy-related proteins can we develop new diagnostic tests and drugs that home in on the changed protein structures and destroy them.

This is the starting point for Power3 Medical. The company uses technologies, know-how and proprietary techniques to identify which proteins exist in a specific type of cell, ascertain how they interact, and change in the course of a disease. Our company focuses on protein-based biomarkers, which are simply proteins that are significant in the diagnosis, monitoring or treatment of disease.

What is significant about diagnostic or screening tests developed from new biomarkers discovered by Power3 Medical?
For example, Power3 Medical R&D has delivered discovery of specific proteins that signal early stage breast cancer (pre-mammography). These discoveries establish the basis of a very sensitive early breast cancer screening test. We have potentially the first breast cancer diagnostic tool that detects disease before a mass can be detected with existing technology! Just think of the potential impact on millions of women's lives not to mention the market, PR and branding opportunity!

Our company believes that we can deliver a breast cancer mass screening tool to be utilized in the physician's office or clinic. Future development will direct treatment and monitoring options and drugs so that the disease is contained and ultimately eradicated before the cancer is ever seen on a mammogram. Biomarker discovery and utility proof of concept is complete. Already underway is the platform prototype proof of concept and initiation of prototyping experiments. Power3 Medical anticipates a commercial ready test can be available in 12- 24 months.

Power3 Medical has also similar quality of biomarker discoveries in leukemia, neuromuscular degenerative diseases and is working on cardiovascular disease as well.

Your strategy has changed. Why the change in focus?
The reason for the change of strategy is multi-factorial. First and foremost, is the fact that our successes on bench research and the speed in which these discoveries came far exceeded our expectations. The current intellectual property that we now possess mandated that we aggressively pursue and exploit the materials and platforms for short and long-term revenue. The market window for new technologies and discoveries like this only stay open for a short amount of time. A huge growth opportunity exists through the licensing of biomarkers and the addition of royalties that should be associated with the deals. Additionally, the discovery of biomarkers, their validation and the ability to develop diagnostic vehicles plays to our greatest strength and core competencies.

On the flip side, in the last 12 months, the Fee for Service market in the field of proteomics has mirrored the Genomics market in so much as the market itself is becoming commoditized. In fact, the monetary output needed to purchase capital equipment in an effort to become competitive with the large high throughput labs in a market with ever decreasing margins is prohibitive.

In our opinion, a far better use of capital investment is for the company to develop our discoveries into products that satisfy critical unmet needs in huge, high margin diagnostic markets, such as breast and prostate cancer, CVD, and neurological diseases. In this strategy Power3 Medical is first to discoveries in the area we do best. In fact, the company has already discovered biomarkers in every disease or condition we have studied thus far and we have leads for more.

The new direction is a focus on the R&D/Discovery of biomarkers and development of new diagnostic test platform. The biomarkers (proteins) lend themselves to a very profitable market. The diagnostic test platform provides not only new techniques for testing but also a showcase product for the biomarkers discovered by Power3 Medical.

What will be the immediate and long-term affect on revenues and shareholder value?
Because of the speed in which these new discoveries have been made and the interest from renowned medical research institutions, the Company has determined that the greatest return for shareholders is the continued discovery and development of these biomarkers. Why? Because of the significant revenue opportunities that exist from the use of discovered biomarkers by large diagnostic companies. In addition, the research institutes have shown great interest in working with Power3 Medical. For example, we have just signed a comprehensive Research Agreement with Baylor College of Medicine to discover and develop biomarkers that may have an impact on neurodegenerative and neuromuscular disease.

With the strategy change, comes a de-emphasis on straight fee-for-service work. That is not to say we will not perform these services, it just means that most of our available resources will be focused on discovering additional biomarkers and developing the one we have. Short-term revenues will see a shortfall. identified biomarkers can yield revenues from upfront payments, licensing and royalties in excess of $10 million, licensed diagnostic tests could yield in excess of $50 million plus royalties.

To be clear, how do these biomarkers get to the public, or how does Power3 Medical deliver them?
Biomarkers discovered by Power3 Medical will be available to the public in a variety of ways. One is by licensing the biomarkers to large diagnostic companies. Diagnostic companies will share the cost of the validation and utility of the biomarkers. These companies will add these new tests to their existing machine or kit for the clinical laboratory. The Physician will have access to these tests for better patient care. The diagnostic company will provide money for marketing and putting them on their system. Another method involves engaging in an in-house Clinical trial for our diagnostic with a CRO for validation and utility purposes. Higher levels of capital will be needed for this channel of development. A third opportunity is to launch a "Home Brew" test for a particular set of biomarkers. This will aid in validation and utility. It will require a group of physicians to participate in the trial. The individual will request the "Home Brew" test, receive the information, and then consult with the physician for interpretation and any treatment.

What is the target market for these biomarkers and their subsequent product development?
There are several specific target markets for the biomarkers discovered by Power3 Medical. The first is diagnostic companies. These companies are interested in identified biomarkers or prototyped diagnostic tests developed from the biomarkers. The world diagnostic market was estimated at over $19 billion in 2001 (Clinical/Merrill Lynch, 2000).

The second is pharmaceutical companies looking for drug targets identified by a discovered biomarker. "The value of cooperation agreements between pharmaceutical and proteomic corporations is now at about 1 billion Dollars," reports Kathy Austin, Technology Research analyst at Frost & Sullivan. "The investments pay rich dividends even if the collaboration offers the pharmaceutical corporation in question only two or three target molecules."

Although today the Power3 Medical customer is a diagnostic and pharmaceutical company, the end user is always the patient. To that end, Power3 Medical may choose to develop and market our own screening test, acquiring our own patients, running clinical trials and finalizing and distributing the test. The end user is the same, the patient. Of note is the channel in which the patient may receive the test. This varies from the doctor or clinic to a "home brew" test, to Direct Access Testing to eventually an OTC test.

Biomarkers and tests for breast cancer screening, diagnosis, and monitoring - $0.5-1 billion (netting a percentage of a market that spends $7 billion on breast cancer diagnostics which include 44 million mammograms annually).
Biomarkers and test for pre-screening and monitoring patients for drug resistance and sensitivity - $100 million-$250 million
Drug for overcoming resistance - $0.5-1 billion
Biomarkers and tests for diagnosis of ALS, MD, MS, Alzheimer's, Parkinson's - $0.75-1 billion

The Company appears to have a new image and attitude. Why is that?
Power3 Medical is a discovery machine for utilitarian biomarkers for use by standard diagnostic companies, pharma companies or used on a new platform developed in-house. The new direction will provide biomarkers for licensing opportunities, alliances and partnerships with large diagnostic companies that yield upfront payments, milestone payments, licensing fees and eventually Royalties. Our image is a bio-diagnostic company with discoveries and a new platform for both diagnostics and discovery.

We are a company with a keen focus on the discovery and development of biomarkers as drug targets, diagnostics and generating the tools applicable for commercial usage.

The Company has a process platform that drives your business model from the scientific end. What is it and what value does it yield?
DISCOVERY Platform: The Discovery Platform is used to obtain intellectual property with utility and market traction. The company pursues research programs that apply proprietary protein discovery technologies to specific medical problems that challenge today's clinics. To this end, Power3 Medical works collaboratively with key clinician scientists at major medical research and treatment centers, including UTMDACC, BCM, UTHSC, and UVA, to define the problems and obtain the crucial clinical samples that provide the definitive answers. In so doing, the company develops products that address the clinical outages to fill the void in a market that faces physicians and patients alike. Advanced, in consort with our collaborators, has built in the path to clinical trials allowing for the validation of the products. On-going success in these validation studies are very attractive to partners in the diagnostic and pharmaceutical arena and add value to the position of the company in negotiations.

Our discovery platform has led to a pipeline of discoveries, including specific proteins that possess a utilitarian role in several disease states.

What's is your Core Competencies that support your discovery and diagnostic platforms?
First, our in-house process for biomarker discovery uses its proprietary IP protected methodology to discover biomarkers in clinically relevant samples. The 2D Gel system of Bio-Rad is used for the separation, following sample preparation. The gels are stained, imaged and analyzed with unprecedented sensitivity for differences in the disease vs. the normal samples in terms of new, up and down amounts of very low appearing proteins. The significance of these differences is evaluated in regards to the status of the health of the individual. The proteins of interest are removed from the gel matrix, taken apart and analyzed on a machine called a mass spectrophotometer. The answers from this machine are put into a worldwide Internet search to identify the protein of origin. This process requires a great deal of literature and work experience to make the answer usable.

Second, our extensive and unique scientific experience and background of our scientists enable the company to deliver the quickest path to significant results. Capitalizing on this expertise, Power3 Medical determines the most direct path thereby addressing the problems with the greatest speed and efficiency of the research through proof of concept, validation, and on to commercialization. Clinical diagnostic experience and manufacturing experience along with FDA regulatory experience at various levels adds credibility to the Power3 Medical outcomes.

It appears you may have a few other competitive advantages?
The company has made many early discoveries in our protein-based research. These early discoveries in a commercial company gives us a heads up advantage, both in terms of discovered biomarkers, but also in terms of setting the standards in validation in Proteomics and Regulatory Affairs.

These discoveries are made, in our opinion, because our methodologies, developed over the last 30 plus years, allow us to find and identify the proverbial "needle in the haystack." Our sensitivity, repeatability and expert database searches, offer us the ability to discover these "hidden" proteins and markers.

New techniques for sample preparation are developed in house at Power3 Medical. Vast improvements in ultra-high sensitive staining and digital image analysis have been made in house. Additional patent applications are being generated from the above processes.

Proprietary software also developed in house for database searching yields very significant IP returns. Not only efficiencies are gained in the discovery process, returns from IP generated from the process moves through the pipeline faster.

Current and past contacts made by the corporate management team affords us the opportunity for collaborations with experts in renowned research institutions, clinicians, diagnostic, regulatory and professional organizations. These relationships are essential because they provide the opportunity to acquire high quality samples and critical patient data.